T&G has reported a loss before tax of NZ$64.2m (US$39.1m) in a year marked by weather challenges and tightening budgets, but confidence in the group’s strategy remains strong
According to T&G Global chair Benedikt Mangold, the loss incurred by the company in the year to 31 December 2023, largely a result of last February’s Cyclone Gabrielle, would have no bearing on T&G’s strategy going forward.
“The impact will add at least 18 months to our strategy’s delivery, but it did not destroy its strong foundations or our confidence that we are on the right track,” said Mangold. “This meant we were able to keep achieving several positive milestones, despite lower volumes, financial constraints and some challenging growing conditions.
“The confidence of BayWa AG, T&G’s ultimate parent company, in the strategy and its delivery was demonstrated by its willingness to provide a NZ$24m (US$14.6m) subordinated facility to support cyclone recovery work and working capital through the year.”
The complexity of T&G Global’s associated insurance claim, resulting in delays in finalising the value of the claim receivable at balance date, has also contributed to the company’s full-year loss before tax of NZ$64.2m (US$39.1m).
“After three seasons of Covid-19-related disruptions, we came into the 2023 financial year focused on converting increasing demand into higher sales volumes,” said Mangold. “But the weather had other ideas. The February cyclone completely disrupted our apples operations in Hawke’s Bay for five days, destroyed orchards on some 13 per cent of our planted hectares and interrupted our supply chains for export and domestic crops. The cyclone, along with five-year highs in rainfall and lows in sunshine across the year, made conditions more than challenging.”
Envy aims for high-value Asian markets
“The clear focus on winning in key markets saw our apple business launch a fast-start programme to get Envy into high value Asian markets as quickly as possible following the March harvest,” said Gareth Edgecombe, T&G Global chief executive. “With 45,000 tray carton equivalents (TCEs) exported across five to six weeks, the programme set a record for Aotearoa New Zealand airfreight. Its success was a team effort across harvesting, quality control, packing, freight management and in-market promotional support. We also achieved good growth in the US with strong support from our Washington growers.”
Apple revenue increased 3.2 per cent year-on-year to NZ$799m (US$486m), while operating profit fell from NZ$27.8m (US$16.9m) in 2022 to NZ$10.6m (US$6.5m). According to the company, lower Aotearoa New Zealand volumes, higher cyclone-related harvesting costs and inflation-driven increases for insurance and fertiliser were partially offset by a softening in post-pandemic shipping rates.
T&G’s Aotearoa New Zealand apple export volumes stood at 4m TCEs, from both its own and independent growers’ orchards, down from 5.2m TCEs in 2022. US apple volumes for 2022/23 were 4.4m TCEs compared with the prior year’s 4.1m TCEs.
In 2024, T&G said it forecast 2.9m TCEs of Envy apples to be exported from Aotearoa New Zealand, an increase from 2.2m in 2023, with the first fruit coming off new plantings and with Envy trees continuing to mature.
Impact of weather and economy
T&G Fresh revenue reached NZ$434.5m (US$264.7m), up 8.5 per cent from the prior year, while operating profit was down 37.6 per cent at NZ$11.1m (US$6.7m) as a result of the cyclone on grower volumes, as well as on the transport network. This was apparently offset by strong pricing in tomatoes during the first half of the year.
“Our T&G Fresh results reflect lower volumes – some due to weather-related shortages and some to consumers tightening their budgets with inflation driving up living cost,” said Edgecombe. “Operating costs were also inflation-impacted, particularly in respect of labour costs.”
In Australia, the business has been reorganised around the company’s strongest categories of citrus, blueberries, grapes and asparagus. According to T&G, the Pacific Islands business enjoyed strong trading with the return of tourism after Covid-19.
VentureFruit well placed for blues
VentureFruit reported revenue of NZ$9m (US$5.5m) compared to NZ$29.1m (US$17.7m) in 2022, and an operating loss of NZ$14.7m (US$8.9m) compared with a profit of NZ$11m (US$6.7m) in 2022.
“This performance was largely the result of fewer new Envy right-to-grow licences being taken up in Aotearoa New Zealand, mainly because of financial constraints on growers in a difficult year,” the company explained. “2020 Envy plantings have yet to produce royalty-earning crops.”
In February, VentureFruit commercially launched Tutti, the world’s first specifically bred hot climate-tolerant apple variety, and June saw the launch of Joli, T&G’s new premium apple brand. Both varieties have been well received and there is good grower interest, the company revealed.
“Blueberry consumption continues to increase globally and VentureFruit is well placed to help meet growing demand through its breeding, research partnerships and licensing arrangements,” added Edgecombe. “T&G’s own blueberry farm in Queensland is being extended to 62ha to meet growing demand.”
International trading revenue fell to NZ$91.8m (US$55.9m) from NZ$100.7m (US$61.3m) in 2022, with an operational loss of NZ$5.1m (US$3.1m) compared with NZ$2.6m (US$1.6m) in the prior year. This largely reflects the start-up costs and expected low initial yields for the Queensland blueberry farm, the company said.
Opportunities for growth
Mangold stated that there was much to be encouraged about in the new season, with “apple volumes looking strong, growth opportunities for both sales and volumes in the US and steady progress in key global markets in Asia”. There were also good growth opportunities in blueberries and the new VentureFruit apple varieties, he pointed out.
“Inflation will continue to influence costs, but these will be partly offset by full-year operational efficiencies from our new Whakatu packhouse in Hawke’s Bay, our continuous improvement programme in apples and our ongoing focus on improving operational efficiencies across the group,” said Mangold. “We have a strong leadership team and workforce who’ve shown considerable resilience, determination and initiative in a difficult year.”
